As Usual, Government Regulation as Political Payoff

I heard the president’s speech at Cooper Union College today and thought it was quite bizarre that he would criticize Wall Street for bad behavior when Washington is currently running our national debt through the roof and the policies that emanated from there in the last ten years caused our current financial crisis. The old adage about those that live in glass houses and stone throwing immediately came to mind. But, the president really believes that the financial crisis we still find ourselves in, despite trillions of dollars in Keynesian spending, is somebody else’s fault. In fact, he indicated that, “…the system as it stands is what led to a series of massive, costly, taxpayer bailouts.” And I thought it was Mr. Obama and his big government colleagues in the Congress who voted unconstitutionally to give away our money to the greedy, misbehaving banks.

Now, the president’s bizarre remarks are one thing, but the financial regulation bill before the Senate is even more bizarre. Crafted by Connecticut Senator Chris Dodd, the bill will do nothing to fix the real causes of the financial crisis. In actuality, the bill amounts to nothing more than a political payoff for Dodd’s benefactors on Wall Street. And this should come as no surprise since Dodd’s donor list reads like a who’s who of the financial services sector.

First of all, Dodd’s bill does nothing to address the primary culprit of the financial crisis – the Federal Reserve. Yes, consumers took out mortgages they could not afford and loan officers falsified applications knowing that they would collect their commissions long before the bad loans defaulted on a bigger institution up the line. But the Fed supplied the poison for it all to happen – easy money. After 9/11, Alan Greenspan’s Fed kept interest rates artificially low at 1 percent for three years. This encouraged a mortgage craze as trillions of dollars were borrowed. It was a government sponsored get rich quick scheme as many housing investors bought homes with low teaser rates and no money down.

You know the rest of the story – homeowners leveraged their homes to the max, rates adjusted up, and the bubble burst when many folks could no longer afford their payments. To add insult to injury, the Fed came to the rescue of financial institutions, even foreign ones, at the expense of taxpayers. Make no mistake about it, the Federal Reserve exists for the profit making of banks alone. It was established by bankers; it is run by bankers; it allows banks to inflate dollars through fractional reserve banking; and it is there for them when they need a few dollars to keep the charade going. No other industry has a full government agency to support its shady dealings like the banking industry. Dodd’s bill, by ignoring the Fed’s culpability in the crisis, has no chance of preventing financial calamities in the future. Additionally, it only benefits the big banks since their benefactor, the Fed, will continue to operate unencumbered by any new regulations or oversight.

If ignoring the Fed’s role in the financial crisis is not bad enough, Dodd’s bill also institutionalizes “too big to fail” bailouts. It should be pointed out that a major rationale of financial reform is to ensure that taxpayers never again get stuck with bailing out firms that are too crucial to our economy to fail. Well, Section 113 of the bill provides for a “Financial Stability Oversight Council” which would identify distressed firms whose failure would “pose a threat to the financial security of the United States…” Section 210(n)(1) establishes an “Orderly Resolution Fund” within the U.S. Treasury that would provide $50 billion in bailout money funded by taxes on financial firms. Of course, ultimately those taxes would come from consumers in the form of higher bank fees.

These two sections of the bill essentially provide implicit guarantees from the government against failure for big banks. They extend the life of the moral hazards that we have become too familiar with. In the end, they will encourage big banks to continue to take undue risks which will once again put taxpayers in harm’s way. These sections of Dodd’s bill will not prevent future financial crises. On the contrary, they only benefit big banks by allowing them to risk everything with the knowledge that taxpayers will be there to pony up bailout funds for them.

Since 1989, Chris Dodd has received over $12 million in campaign contributions from the financial services industry. They own him and this bill proves it. On the other hand, the president is yet to embrace Dodd’s bill. In his speech at Cooper Union he said to financial firms, “I want to urge you to join us, instead of fighting us in this effort.” If he chooses Dodd’s bill to reform the financial industry, he probably won’t get much of a fight from Wall Street.

Other than a mention of fiscal irresponsibility over the past decade, Mr. Jacobine completely ignored what the Republicans, what the oh-so-fiscally-responsible conservatives did that brought about this crisis.

But, the president really believes that the financial crisis we still find ourselves in, despite trillions of dollars in Keynesian spending, is somebody else’s fault.

Ah – so the Great Recession didn’t start until AFTER Obama took the oath of office? Hey – weren’t you recently part of that group down in Texas who were deciding what history our kids were supposed to learn, like Joe McCarthy was actually a great man, and Thomas Jefferson (who authored the Declaration of Independence) didn’t need to be mentioned?

No, you weren’t part of that group – but you seem to have the same grasp of history that they do. What a crock! You point out how terrible things went with the economy, but you don’t want the government to regulate the system to keep it from getting any worse, never mind that it was the epic scale of DEREGULATION that got us to this point!!!

You continued:

In fact, he indicated that, “…the system as it stands is what led to a series of massive, costly, taxpayer bailouts.” And I thought it was Mr. Obama and his big government colleagues in the Congress who voted unconstitutionally to give away our money to the greedy, misbehaving banks.

I seem to recall that the TARP was passed under the BUSH 43 administration – but you’re slick, aren’t you? You point out that Obama voted for it…but you conveniently left out the fact that it was a REPUBLICAN at the helm of the ship of state at the time…and for the eight years that led up to the point.

So, um, Kenn:

– Didja happen to notice where the Dow is right now? It’s what, something like 60% HIGHER than when Obama took office.

– Didja happen to notice that the nation’s employment is growing now, instead of losing 700,000+ per month when Obama took office? And how about you look back to the recessions under Bush 41 and Bush 43 (the dot-com bubble) and see how long it took the nation to start hiring again. Maybe you’ll find out why they called those ‘jobless recoveries’.

– Didja happen to notice that GM just paid off their loans to the U.S. and to Canada, with interest (profit for the taxpayer), five years early? AND did you happen to notice that they are on track to put their stock back on the market later this year…which means that the American taxpayers will make even MORE profit when the stock sells! Reagan did the same thing with Chrysler – but THAT was okay, ’cause Reagan wasn’t a socialist like Obama, right?

In other words, Kenn, don’t give me your rhetoric. Give me the FACTS. Give me the RESULTS. “By their fruits shall ye know them.” Jesus said that…and I think that is very wise. That’s why I look at what happened to the economy under Reagan, Bush 41, and Bush 43…and what happened under Clinton, and what IS happening right now under Obama.

DEEDS, not words, Kenn. Don’t give me your rhetoric. Give me the facts, the results…the fruits of the labors of the Republicans…and of the Democrats.

Glenn Contrarian

And on the subject of government stimuli, picture this:

You own a business. The economy takes a serious downturn, so there are fewer buyers for your products…and you’re making less money. You see that you’ve got to cut some of the fat from your company. What do you do?

If you’re like the vast majority of business owners, you don’t want to get rid of your bought-and-paid-for infrastructure, then the first thing to go are employees, right? That’s just the way it is. You just added some more people to the ranks of the unemployed. And at the same time, tens of thousands of businesses across the country are facing the same problems you’re facing and are ALSO laying off people because THEY are cutting business costs…which means even more people unemployed.

So what does this mean? More unemployed people…which means that many fewer people with money to buy things or services.

Which means the business climate gets worse for you and the other business owners – and you can’t demand business, so you have to cut more employees. Which leads to MORE people unemployed and FEWER people with money to buy things and services.

Do you see the vicious circle? It’s quite real, Kenn. But we’re not done yet!

Now, Kenn – YOU’RE the American President. You see this vicious circle with worsening unemployment and worsening business climate. What do you do? Just let it go? Let the business world fix itself?

Considering the vicious circle I described above (which we have seen three times before), tell me exactly HOW the business world and the marketplace would ‘fix itself’.

DETAILS, Kenn – how’s it gonna happen? How do you get businesses to start hiring again?

I’m really looking forward to your answers.

Kenn Jacobine

You don’t understand Glenn. I consider big government Republicans and Democrats to be one in the same. “Obama and his big government colleagues in Congress” includes the Republicans.

Two – you want to still ignore the culpability of the Fed and Fannie and Freddie for the crisis. Do you really believe that with the exception of deregulation the federal government’s hands are clean? How convenient since you can blame capitalism (deregulation) for the crisis and not your beloved government.

three – the Dow is where it is because it is the next Fed induced bubble to pop. Where do you think the trillions of dollars the Fed has infused into the economy has gone? Interest rates are going up. Big banks will soon pull out of the market before it bursts. I would get out soon Glenn before it blows.

four – “the nation’s employment is growing now” I love the liberal speak. So we aren’t losing as many jobs per month so therefore we are gaining jobs? That’s like saying a freeze on spending equals a cut in that program.

Glenn, I am a Ron Paul Republican. I criticize Democrats because they are in charge right now. When Bush was in charge I criticized him and his cronies – Paulson, Rumsfeld, et. al. I am against statists of all stripes.

The government causes recessions and depressions. The market is not perfect but it will always correct its own excesses. That is what recessions are: a correcting of the malinvestments made during Federal Reserve, government spending induced booms. Please indulge yourself, click on my name, and go to a previous article I wrote on booms and busts. The link for Austrian Business Cycle Theory is http://mises.org/daily/672.

The scenario you painted is a familiar one. I did own a business in a previous life and had to layoff workers. It is a self-fulfilling prophecy. The best thing for the government to do is let the economy liquidate all its bad investments – no stimulus at all. In the short run it would be very painful, but recovery would come sooner and more robustly. That is the way we use to deal with recessions until 1929. First Hoover and then FDR primed the pump and we had the longest depression in our nation’s history – 15 years. Our leaders have done an even worst job of hindering our economy’s ability to cleanse itself this time. Thus, in my view we are headed for another collapse and in the view of many Keynesian economists the recovery will be slow, long, and sluggish.

Baronius

I haven’t heard much about the Dodd bill. It sounds like the “too big to fail” institutions are extra-protected and extra-regulated. How that’s different from being nationalized, I don’t know.

As for the Federal Reserve, I just don’t see the problem. I’m not going to get in an argument with a Paul supporter over it, but it just doesn’t strike me as a big deal. I also don’t get worked up about campaign contributions generally.

This bill will also keep banks out of the derivatives market. That makes sense. Call me a wuss, but derivatives scare me. On the other hand, banks can lose a fortune on any number of risky moves, and you can’t regulate away risk. But derivatives scare me.

Monetary policy is not that hard to understand. Just like anything,too many dollars in circulation means each dollar is worth less. Thus, this is where inflation comes from. When the trillions of dollars that the Fed has loaned to banks for loans is finally put into the economy and banks employ the money multiplier general price increases will be through the roof. My hope is that when this happens more Americans will finally be interested to learn how the Fed has destroyed our free market system in favor of profiteering by the big banks. Many still aren’t listening even though there is a lot of incriminating evidence against the central bank.

If this bill is such a boon for Wall Street and the big banks, why are they spending millions of lobbying dollars fighting it? Just for show?

ALL pols depend on big corporations INCLUDING banks and Wall St. firms for money.

If I’m not mistaken, it would be tough to run a muli-million dollar campaign out of bake sale profits. If it didn’t cost millions to run for public office, just maybe the pols wouldn’t be obliged to be beholden to all the deep pockets in this country.

There are all kinds of finger pointing that can be done. But government is hardly the only culprit. Kenn obviously believes that business should simply be left to its own devices and everything will be ducky.

The bill would not ‘bail out’ failing institutions — it would dismantle them. They would not be given taxpayer money to continue operating. The funding in the bill is similar to what is required when the FDIC shuts down a failing bank, just on a larger scale.

And blaming the amoral risk-taking of investment banks in the 2006-2008 period on the Fed — which is what Kenn, securely bound in his ideological straitjacket, blames everything on — is simply uninformed and ludicrous.

Since Kenn doesn’t believe the Fed should even exist, of course he doesn’t like the Dodd bill, which gives new authority to the Fed.

But the Fed doesn’t make campaign contributions to politicians. Wall St does. And Wall St is lobbying furiously against the bill, especially the derivatives part, but also the consumer protection provisions.

By the way, there is a total of $600 trillion worth of derivatives in investors’ portfolios, all largely unregulated. These bizarre and labyrinthine devices do not behave according to market logic, and the markets will not magically clean up the mess, as Kenn suggests with blind faith.

I’d like to believe that, Handy, but then again, it looks like a compromise from the get-go, just like Obamacare.

The best approach is the most direct one: break up the suckers – BofA, Citibank, Morgan & Stanley, Goldman Sachs – so they’d never be “too big to fail.” Not only would it invigorate competition; it’d rendered all such incapable of impacting on the nation’s economy. Everyone would be a winner.

Whenever I see the header that accompanies Kenn’s articles, I am reminded of a memoir by Bette Midler, punningly titled “A View from a Broad.”

Needless to say, her prose is rather more entertaining than Mr. Jacobine’s. And I’d venture to say she knows at least as much about the Fed — the real world version, as opposed to the paranoid fantasy version.

Exercise the same prerogatives, Handy, that we used with GM. All those financial firms and investment banks contributed to the present crisis. None of them are clean – if the suit against Goldman Sachs – only civil, unfortunately, not criminal – serves as any indication. Reinstate the anti-trust laws. Break up the suckers just like AT&T was broken up once. They are monopolies.

I don’t see why you object to radical solutions when radical solutions are the only once that will do the job. Stop apologizing for a lukewarm administration and think instead of what’s good for the country.

Roger B

An opening statement warned me that Kenn is naive:

“But, the president really believes that the financial crisis we still find ourselves in, despite trillions of dollars in Keynesian spending,…”

Keynes advocated directing money to PEOPLE, consumers, not banks, corporations and other large institutions. Money directed to low income consumers spreads out thru the rest of the economy with a high Economic Multiplier effect. Money directed to companies and rich people has a low Economic Multiplier. Thus, money directed to corps at the expense of people has a negative effect.

Indeed, that is the problem of both the Bush and Obama administrations: they directed tax money (which is predominantly paid by individuals) toward businesses (largely as tax cuts, ironically), thus depriving consumers of discretionary spending while parking the money where it is least effective.

“Didja happen to notice that GM just paid off their loans to the U.S. and to Canada, with interest (profit for the taxpayer), five years early?”

Doesn’t the US govt own GM? How exactly does one lend money to oneself then pay themselves back.

This type of convoluted logic eerily reminds me of those that believe that 19 Sauds operating out of one of the most backwater countries in the world successfully penetrated the airspace of the most militarily powerful nation in the world. Some people will believe anything.

No Glenn it is not possible by virtue of what a loan is to loan oneself ones own money even it that money was printed on demand and made out of thin air, and is fiat in nature.

What about the hundreds of billions of make work money in Obama’s stimulus of last year. Didn’t that go to workers directly who are also consumers?

And to advocate that government can break up companies is insane. The market is the best mechanism to do that. There are effective bankruptcy laws on the books. What if Uncle Scam wanted to break up Ford to help its position in owning GM?

When we eventually go off the cliff due to the government’s meddling, spending, and “regulating” my blog that week will unfortunately be “I told you so”. Of course, that is assuming that martial law is not declared and there is still 1st Amendment rights in America.

Jordan Richardson

When we eventually go off the cliff due to the government’s meddling, spending, and “regulating” my blog that week will unfortunately be “I told you so”.

If you don’t “go off the cliff,” will your blog be “I was wrong, I’m sorry?”

You don’t understand Glenn. I consider big government Republicans and Democrats to be one in the same. “Obama and his big government colleagues in Congress” includes the Republicans.

The fact that the parties do share similarities does NOT mean they are one and the same. The last year’s worth of fight over Health Care Reform should have taught you that, what with the most strictly party-line legislative fight since the Civil War.

Two – you want to still ignore the culpability of the Fed and Fannie and Freddie for the crisis. Do you really believe that with the exception of deregulation the federal government’s hands are clean? How convenient since you can blame capitalism (deregulation) for the crisis and not your beloved government.

Fannie and Freddie were part of the problem, but only PART. And what YOU are ignoring is the fact that rampant deregulation WAS the biggest single factor in enabling the Great Recession. You’ve bought into the line that the less governmental regulation, the better – never mind that there is NO historical evidence for your claim. What we NEED, Kenn, is a continual search for “Goldilocks regulation” – neither too much nor too little. Too much regulation, and you wind up with the Soviet Union. Too little regulation, and if you’re lucky, you wind up with China. If you’re not so lucky, you wind up with Somalia.

When you’re dealing with millions of people, Kenn, the IS such a thing as too much freedom.

three – the Dow is where it is because it is the next Fed induced bubble to pop. Where do you think the trillions of dollars the Fed has infused into the economy has gone? Interest rates are going up. Big banks will soon pull out of the market before it bursts. I would get out soon Glenn before it blows.

Fear! Fear! FEAR! The sky is falling! And you know something, Kenn? You’re right. If you wait long enough, there WILL be another recession. There WILL be another depression. There WILL come a day when the dream that is America will end. But the key is to delay each of those as long as humanly possible. You can go hide your money under the mattress if you want, but I’d recommend that you invest in land – some here, some overseas.

Y’know something? This Monday I’m seeing a bankruptcy lawyer. I’m buried in debt, and I don’t see a way out. I might lose my house and car. But you know what? We’re still operating one business, and next month we’re starting another. In other words, you ride the wave as well as you can, for as long as you can…and when you do finally have to take a dive, you tread water till the next wave comes along.

four – “the nation’s employment is growing now” I love the liberal speak. So we aren’t losing as many jobs per month so therefore we are gaining jobs? That’s like saying a freeze on spending equals a cut in that program.

Well, Kenn – it seems that to you, up is down and in is out. The vast majority of the economists and Big Business both disagree with you. You can hide your head in the sand and tell yourself that the sky is falling…but the vast majority of the professionals who know what they’re talking about see something else. I refer you again to the list of charts I referenced in the beginning of this comment.

Glenn, I am a Ron Paul Republican. I criticize Democrats because they are in charge right now. When Bush was in charge I criticized him and his cronies – Paulson, Rumsfeld, et. al. I am against statists of all stripes.

Problem is, Kenn, when you are dealing with millions and millions of people, government is ABSOLUTELY NECESSARY. Problem is, you – and Ron Paul – are ignoring history. To give Ron Paul his due, there ARE countries that work more on the principles he espouses – little or no regulation, no overseas troops, taxes are low. And you know what? They’re ALL third-world countries.

And why is that? Why is it, Kenn, that ALL first-world countries have what you see as high taxation and too much regulation, and countries who are closer to Ron Paul principles are ALL third-world countries.

Why is that, Kenn? Do you really, truly think that’s just a coincidence?

The government causes recessions and depressions.

Yes…and no. That statement’s oversimplification is breathtaking. Let me correct it for you: government causes recession or depression by OVERregulation or UNDERregulation. The three worst economic times since WWI all came after Republican administrations slashed taxes and massive deregulation in the years leading up to the economic crises. Do you think that this is also a coincidence?

“Goldilocks regulation”, Kenn – that’s the key.

The market is not perfect but it will always correct its own excesses.

Of course! Let the market take its course! The Weimar Republic did that (remember the wheelbarrows of money just to buy bread), and what happened? Hitler!

When, oh WHEN will you conservatives start paying attention to HISTORY!!!!!! “Those who forget history will be doomed to repeat it.”

That is what recessions are: a correcting of the malinvestments made during Federal Reserve, government spending induced booms.

Ah – so the GOVERNMENT caused the dot-com bubble! And the GOVERNMENT caused the S&L crisis of the late eighties. If you don’t like government, Kenn, then move to Somalia!

Please indulge yourself, click on my name, and go to a previous article I wrote on booms and busts. The link for Austrian Business Cycle Theory is http://mises.org/daily/672.

Critics have concluded that modern Austrian economics generally lacks scientific rigor, which forms the basis of the most prominent criticism of the school. Austrian theories are not formulated in formal mathematical form, but by using mainly verbal logic and what proponents claim are self-evident axioms. Mainstream economists believe that this makes Austrian theories too imprecisely defined to be clearly used to explain or predict real world events. Economist Bryan Caplan noted that, “what prevents Austrian economists from getting more publications in mainstream journals is that their papers rarely use mathematics or econometrics.”

The scenario you painted is a familiar one. I did own a business in a previous life and had to layoff workers. It is a self-fulfilling prophecy. The best thing for the government to do is let the economy liquidate all its bad investments – no stimulus at all. In the short run it would be very painful, but recovery would come sooner and more robustly.

After the economic meltdown that happened in the Weimar Republic, their economy DID boom. With a highly-regulated economy. With universal health care. With government stimulus of a degree far beyond anything we’ve done. And it was all done under Hitler.

Kenn, are you really so clueless as to what happens when an economy melts down? Look not only at the Weimar Republic, but also at Russia of 1917, and at what became of Yugoslavia after Tito died, and at Zimbabwe.

When an economy melts down, so does society…and as HISTORY shows, this is often the best opportunity for tyrants to rise and take control. Do you really, truly want to subject America to that possibility? Do you?

That is the way we use to deal with recessions until 1929. First Hoover and then FDR primed the pump and we had the longest depression in our nation’s history – 15 years.

I really do wish you’d learn your history. In the 1920’s the Republicans slashed the tax rate down to 25% and deregulated the business credit industry, and we had boom times…until a certain day in October of 1929. The government took a hands-off approach for the next 3.5 years…and that’s how we wound up with soup lines and Hoovervilles.

THEN in March of 1933, FDR was sworn in, declared a bank holiday to stop the rampant bank runs, and began government-sponsored jobs on a grand scale. Our economy began improving almost immediately to the point where we were finally above the 1929 levels…and then FDR made a mistake and listened to the Republicans in 1936 about taking austerity measures and cutting government spending – and you know what? The economy started stagnating once more!

And what got us out of the Depression? You know as well as I do – WWII. And HOW did WWII get us out of the Depression? Government spending on an unprecedented scale to build our military and industry. In other words, after adjusting for today’s dollars, the government stimulus FDR made for WWII is the largest in human history.

And we are STILL getting benefits from it in countless ways. Does that mean the bigger the stimulus, the better? Of course not. What it DOES mean is that HISTORY SHOWS that in times of recession or depression, a government stimulus is a tried and true method of helping the economy back on track. And history ALSO shows that when economic times get really bad, the LACK of swift and effective government action can result in the rise of tyrants.

Our leaders have done an even worst job of hindering our economy’s ability to cleanse itself this time. Thus, in my view we are headed for another collapse and in the view of many Keynesian economists the recovery will be slow, long, and sluggish.

Please do not take this as an insult, but your belief is directly attributable to your lack of understanding of history. Historical event after historical event proves you wrong.

You are a sage. Perhaps, like myself you are not constantly deluged with the love fest the lamestream media has given to Obama in the U.S. and therefore can look at things much more objectivly.

Glenn,

I will respond to your diatribe, but first I have to work today so I can pay for my own health care and to put my son through college.

zingzing

does anyone around here get their news from the “lamestream media?” (seriously, you have to think of something better than that. that’s heinous.) i don’t own a television or regularly buy a paper, although my roommate does leave the ny post around (which is probably the worst rag i’ve ever read, if entertaining.)

the problem with that, of course, is that we all get our news from biased news sources. the “lamesteam” (god, that’s awful) may not be all that great, but at least the have to pretend to be non-biased. well, they don’t “have” to. at least not beyond the slogan.

“america’s most trusted new source” (by 30% of the nation)…

“fair and balanced” (or 100% not fair and balanced)

“the place for politics” (eh? wha? if a television station is a “place,” i’m a telescope.)

but still, trusting something on an obviously biased site, which probably gets its news (at least at the start of the spin cycle) from a “lamestream” (seriously, stop.) source is just as, or more dubious.

information, when put through the fucked up thing that is “political analysis,” always comes out as a version of the truth. no one in their right mind should trust the media, no matter how “lame” (do you not see how stupid this is?) or not it happens to be. you’re being fed a version of reality, not matter how much they agree with your preconceived notions.

As for the “lamestream media” the big point to remember is that one’s own national media tend to miss the most. In other words, often, the place to go for news about America is the international media, where American censors,whether they be formal, informal or editorial, do not immediately filter out details of real interest. I know this is especially true of Israel.

The other good source of news is bloggers with a good feel for the pulse of a situation. So, it looking at Afghanistan-Pakhtunkhwa, say, milblogs and blogs by Pashtun (or Punjabi) are very helpful.

Finally, there are the independent news sources the government in a jurisdiction does not like – like Arutz Sheva or Ma’an in Israel.

Real jobs are not being created. “The American economy added 162,000 jobs in March, the Labor Department reported Friday, in a month when the government hired thousands (60,000) of temporary census workers.” Government jobs are not productive jobs that add anything to the economy. Besides Uncle Scam has to print new money to pay their salaries. Additionally, the 9.7 % figure is bogus. The real number is closer to 20% when you include discouraged workers and the underemployed.

How many discouraged workers are out there who gave up looking and are off the rolls? “The unemployment rate held steady at 9.7 percent, the Labor Department said, but it is expected to worsen later this year as discouraged workers re-enter the labor force. […]” This came from the article you linked, Glenn. Even after 1929 the economy stabilized for a while and then sank to 25% unemployment by 1932. You know why, Glenn, because of Hoover’s stimulus program. Instead of letting the economy liquidate all the bad investments from Benjamin Strong’s Fed induced boom, Hoover then FDR attempted to re-inflate the bubble. What we got was a 15 year depression. Does this sound familiar to you?

Housing prices have leveled off or gone up some because of a government credit to home buyers and next to nothing interest rates – isn’t that what got us into this mess in the first place?

The parties are essentially the same. The Republicans rebuffed health care reform because it was a real political loser. The Democrats are too arrogant to realize how big their losses are going to be in November

“rampant deregulation WAS the biggest single factor in enabling the Great Recession”. Who supplied the money that bankers and homebuyers used to be irresponsible with? – the Fed. What law encouraged banks to loan money to bad risks? – the community reinvestment act. What government agencies guaranteed trillions in bad debts Fannie and Freddie. These WERE the biggest causes of this depression. And you know what they all came from the government.

The stock market is the next bubble. Banks that got lots of credit from Bernanke have invested at handsome returns. They will know when to pull out. Then that bubble will pop.

“To give Ron Paul his due, there ARE countries that work more on the principles he espouses – little or no regulation, no overseas troops, taxes are low. And you know what? They’re ALL third-world countries.” I guess Hong Kong, Switzerland, U.A.E. Qatar – are third world countries? By the way, the U.S. became economically successful (latter half of 19th Century) before all the regulation and nanny state existed.

“Of course! Let the market take its course! The Weimar Republic did that (remember the wheelbarrows of money just to buy bread), and what happened? Hitler!”

The Weimar Republic experienced mega-inflation because its central bank printed it all to finance the war effort. Militarism and imperialism were why they got involved in WWI. Does all of this sound familiar in light of our current circumstances?

No Glenn, perhaps you should read history. Or perhaps you are reading the government history books kids get in the public (government run) schools.

Mark

“Government jobs are not productive jobs that add anything to the economy.”

Pretty cramped use of the word ‘productive’ here, Kenn. What of the argument that government workers produce the ‘environment’ necessary for capitalism to function at all?

What bureaucrat actually helps to produce a capitalist system? I suppose clerks in the court system and administrators in the defense and treasury (only releasing funds for constitutional measures) departments would support a capitalist system but that is it. All other bureaucrats simply feed off the system.

Glenn Contrarian

Kenn –

I only have a moment or two, but your comparisons to Hong Kong, Switzerland, U.A.E., and Qatar are way out of the ball park.

Hong Kon is still effectively a city-state…and has FAR more regulation than you seem to think. I’ve been there at least ten times.

U.A.E. – you have seen regulation until you’ve been to a Muslim country. I’ve been to the U.A.E. at least twenty times (I’m not kidding). Ask me about it sometime. There, if you get fired from your job, the company posts your picture in the paper and says everything they think you did wrong and effectively say, “Don’t hire this person”.

Qatar – That IS a third-world country, and only slightly better off than Yemen.

Glenn, I have lived in both 3rd world countries and 1st world countries. Qatar, where I currently reside, is first world – it is in the top five GDP per capita in the world. Anyway, to say it is a lack of regulation that has made 3rd world countries so poor is ridiculous. It is very complicated – corruption, geography, lack of resources, tribal mentalities are just a few reasons. I dare say that with the corruption in Africa if there was more economic regulation the people would be so much more worse off. Will be back in a minute with the Hoover reference.

If there’s anything I enjoy more than being right, it’s being shown that I’m wrong about something – and you just slammed me for my assumptions about Qatar. Please understand that I’m not being sarcastic here. I really am grateful whenever someone shows me that I’m wrong about something. The way I see things is, if I’m right, I win…and if someone shows me I’m wrong, then I win anyway because I’ve just had a bit more of my ignorance removed. I’m not afraid of being wrong – I’m only afraid of refusing to correct myself when someone shows me I’m wrong.

When it comes to regulation in an Islamic country, you’re right about there being less regulation in the Qatar and UAE (where I was again wrong). When it comes to business, as I perceive it, they are indeed more laissez faire than most of the West. However, you yourself certainly have seen the difference in the past few years between oil-rich Qatar and oil-poor UAE. For the purposes of discussion on this topic, Qatar is not at all a proper example for comparison since they have huge oil reserves and a relatively small population.

Look back at the UAE – they are oil-poor. Instead they tried to be a center of commerce, a “Singapore of the Middle East”, if you will. How well did the less-regulated economy of the UAE fare in the worldwide recession? I would suggest that the UAE is a closer comparison to the US because while (unlike the UAE) America does still have a fairly significant manufacturing sector, the real engine of today’s American economy is (as in the UAE) our financial sector…which, I think, can also be said of England.

Who weathered the Recession better? The UAE? Or America? So far, we’ve done better.

As to your comment on regulation in Africa…who has more regulation – any of the fairly unregulated nations in Africa? Or Qatar? Or the UAE? Or ANY of the first-world nations?

I think that the reason you’re complaining about the effects of economic regulation in Africa is NOT that it is in and of itself economic regulation. I think that you’re confusing economic regulation with corruption – the two are NOT the same. Economic regulation which is achieved with a low level of corruption results in high levels of success. However, economic regulation accompanied by high levels of corruption (as in Africa) results in despotism e.g. Zimbabwe. You used to teach in Zambia – you know what I’m talking about.

Now, as to Herbert Hoover – you showed me my error in my assumption that he never attempted any type of stimulus. He DID…but only in the last year of his office. Before then, he generally followed the advice of his Secretary of the Treasury, Andrew Mellon, who was a great supporter of laissez-faire economics.

It wasn’t until his last year in office that Hoover (supported by a Democratic congress) passed the RFC and the FHLB.

About the RFC and the FHLB, the majority of the sites I perused (I do try to keep to the more reliable sites) seemed to indicate that they did have significant success, but were both hobbled by requirements for transparency which made them unattractive to Big Business.

So YES, Hoover did attempt types of stimulus – almost all of which came in his last year of office. Before then, he kept to the laissez-faire mindset of Andrew Mellon, who once said:

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. . . . [That] will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”

Hoover’s belated efforts did have some positive effect…but as with almost all government actions, the effects of those actions are not felt for months are years. That is why I feel quite justified in stating again that after the Crash of October 1929, the government took a hands-off approach for the next 3.5 years.

In all honesty, Kenn, I would compare Hoover’s efforts not to those of Bush 43, but to Bush 41. Why? Remember the recession then that followed the S&L crisis? Remember “No New Taxes”? Well, if conservative economic theory held true, then the taxes that Bush 41 passed would have made things that much worse. Instead, they set the stage (did not cause, but set the stage) for the economic boom years under Clinton. Likewise, Hoover’s efforts in his final year, though they only met with mixed success, may well have set the stage for FDR’s success in leading America out of the Depression.

And one more thing – do you really think that FDR prolonged the recession? Do you really? Did you know that on the DAY before he took office, five thousands banks went under? this list of what FDR did in his first hundred days that kept this nation from dissolving into another Weimar Republic.

Glenn Contrarian

(continued in this second comment)

If you think that FDR ‘prolonged’ the Depression, then look at any chart showing how employment and the economy increased almost immediately after his first hundred days. Then, in 1937, there was a recession, a temporary reverse of the progress we’d made out of the Depression:

In June 1937 some of Roosevelt’s advisors urged spending cuts to balance the budget. WPA rolls were drastically cut and PWA projects were slowed to a standstill. The American economy took a sharp downturn in mid-1937, lasting for 13 months through most of 1938. Industrial production declined almost 30 per cent and production of durable goods fell even faster.

Kenn, if you rev the engine of a car, the car goes faster. You use more gas (and wind up paying more money for that gas), but the right burst of speed at the right time can be crucial to preserving you and yours.

In economic terms, this is called a “stimulus”. FDR did it right (except for in 1937)…and so did President Obama.

One must ask, though – since the conservatives are all about letting business take care of business, and since conservatives believe that businessmen should be left alone, that they know what they’re doing, then why is it a bad thing that the Dow Jones Index has shot up 42% since Obama’s stimulus passed in March of last year?

Hoovers public works projects happened before his last year in office as did his aid to states. Also. the Fed continued to inflate the dollar up till about 1932.

Who has more regulation – EU nations or America? I believe EU nations. Who has a higher GDP and is more friendly at least at this point to business? I believe the U.S. Now, the biggest problem I see with our economy is that the middle class is being depleted. Again, I would blame the government. Various government agencies, regulations, and tax requirements restrict competition. They make it harder for small business, mom and pops, to get started and be competitive against the big boys. Just look at the WalMart effect in the country. Not to get too personal but you mentioned you are a business owner. Don’t you feel like all the requirements the government places on you not only takes you away from your business to do paperwork but restricts your ability to compete by taking scarce resources from you?

The dow is up so much because it is the next Fed induced bubble to pop. How could the market go down by 50% and then jump up by 40-60% in such a short time during a major recession/depression. It is not based on corporate profits or a rosey economic outlook because even liberal economists are predicting a long sluggish recovery. And how come the market didn’t dip when Obamacare was passed? No matter what you think, professional investors know that the program will cost companies more.

The market is a result of the trillions of liquidity dumped into the economy by the Fed since early ’08.

Baronius

Kenn, isn’t the high stock market due to the low interest rates? People have to put their money somewhere, and no one’s making money on bonds.

And that proves the Austrian School of Economics business cycle theory – the Fed’s artificially low interest rates cause investors to malinvest their excess dollars into a stock market that is going up not based on sound economic fundamentals but because it is a place to put their money. The dot.com bubble was the same. People threw excess dollars into an unproven industry. The housing bubble – excess money thrown into houses to get rich quick. Malinvestments – we are left with a housing glut. The Fed does it to us time after time after time and the reform bill before Congress give the Fed more power to fuck up our economy. Unbelievable!

John Wilson

The problem is that “The Austrian School Of Economics business cycle theory” is just one of the many theories in the Austrian school, none of which lead to or proceed from a mathematical model, or any other coherent model. Which is why the Austrians are not taken seriously by any except Evangelists. It’s like Creationists attacking Evolution: faith-based.

I know of two Austrians who predicted the financial meltdown – Ron Paul and Peter Schiff. To the best of my knowledge no “mainstream” economist, politicians, or Fed officials saw it coming.

Glenn Contrarian

Kenn –

Hoovers public works projects happened before his last year in office as did his aid to states.

According to every site I checked, the RFC and the FHLB both were started in 1932.

What are your references that prove otherwise?

Unless you prove my references wrong, then you are left with the first 3.5 years of the Depression being ‘solved’ by Republican laissez-faire economic theory.

LOOK at any economic chart you like, Kenn – in the economic crises of BOTH the Depression and the Great Recession, the economy was going down in flames and CONTINUED to go down in flames…until a Democrat came along with a Keynesian stimulus. You can pretend otherwise all you want…but history clearly shows otherwise.

So how long are we going to wait this time for adherents of the Austrian School to be ‘proven’ right? 10 years? 40 years? 58 years? The last is how long our economy was protected by Keynesian economics.

Furthermore, when I gave you clear examples of what happened when economies were allowed to fail in the absence of strong government action i.e. the rise of dictators, you gave no response. If nothing else got your attention, that should.

On another (less contentious) subject, I just read that because of the Patriot Act, expatriates such as yourself must maintain a stateside residence in order to maintain an account in an American bank. Does this apply to you, and if so, do you have any advice for this prospective expat?

Glenn,
For what Hoover did in the 1920s to help bring about the Great Depression please read Hoover’s Depression. An article on his interventionist program as president is Hoover’s Policy . In this article it is stated that, “federal spending soared between 1929 and 1932 — increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime”.
The second article also talks about how the Fed’s easy money policy was what ultimately caused the Great Depression. This is a Wall Street Journal article so thus relatively mainstream.

As to the bank issue – I read the same article and am befuddled by it. I own a home in the States and have always used my in-laws mailing address and have never had a problem with my credit union account. Even last summer I spoke in person with a credit union official who was familiar with the so called “Patriot Act” stipulations about transferring money from my international bank account to my U.S. account and she said nothing. So I honestly don’t know.

Glenn Contrarian

Kenn –

Thanks for the reply on the Patriot Act.

I read your references…and I noticed a few problems. Hoover’s Depression listed as Hoover’s sins:

bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending (e.g., subsidies to unemployment and public works)

– “bolstering of wage rates and prices”. The author does not back this up with reference or example…but let’s take him at his word. Personally, I have no problem with a minimum wage – it sure would have been better for those Indian and Pakistani workers I saw in the UAE trucking back and forth between construction projects. But that’s for another time. Prices? That would be wrong – but I’d still like to see evidence of such.

The 1920s was a decade of expansion, reflecting recovery from World War I, new information and communications technologies like radio, and new processes like motor vehicle production using assembly-line methods. Accounts of the >twenties in the United States (such as Kindleberger 1973) emphasize the ready availability of credit, reflecting the ample gold reserves accumulated by the country during World War I, the stance of Federal Reserve policies, and financial innovations ranging from the development of the modern investment trust to consumer credit tied to purchases of durable goods like automobiles. Credit fueled a real estate boom in 1925, a Wall Street boom in 1928-9, and a consumer durables spending spree spanning the second half of the 1920s.

In other words, it’s a mistake to blame Hoover for the credit problems because he didn’t follow laissez-faire policies when it was the laissez-faire policies of the previous administrations that led to those credit problems in the first place!

– “propping up of weak firms”. The wisdom of this depends on the importance of the firm chosen to prop up. If it is a huge firm that is crucial to America’s industrial sector – say, General Motors – then such a “propping up” is a very good thing…especially when said bailout is in the form of loans and stock that result in PROFITS for the taxpayer as the five-years-early payback of GM’s loans have indeed done, and as the sale of taxpayer-owned stock will do probably by the end of this year.

“…and increased government spending”. In fact, you quoted your other reference that claimed ““federal spending soared between 1929 and 1932 — increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime”.

In other words, their data are apparently false…and their mistake fooled you, too. Where did they get their data from?

Propping up prices and protectionist policies may be part of what led to the Depression…but the greater causes by far were easy credit and wild speculation.

So far, I see government activism by Hoover and a few public works that continue to benefit America even now…but NO real nationwide stimulus before 1932. The real culprit of the Depression was laissez-faire economics, for such is where we get the easy credit and wild speculation that caused the Depression…and the Great Depression.

I agree and Austrian economists agree that what caused the the Great Depression is what causes recessions/depressions altogether – artificially easy credit issued by the Fed and wild speculation (malinvestment) by consumers. The largest swings down in the economy coincide usually with a big gap in between the lowest rate in a period and the highest the rate gets after the Fed tries to slam the breaks on an overheated economy. Investors put that excess money somewhere like stocks in the 20s and 80s. They put it in dot.coms in the 1990s. And because the government encouraged them to through Fannie and Freddie guarantees in housing in the 2000s. Since that bubble popped banks and others are investing the excess money in the next bubble – the stock market. When the rates start to go up that bubble will pop too.

Think about this – what do you think accounts for the rising price of gold while the stock market has also gone up enormously? I think it is because a lot of investors have gotten wind of the vicious cycle that the Fed perpetrates and know that stocks are way over valued. Yesterday the dollar gained in value and gold also went up. Why, because smart investors know the Fed has destroyed the dollar and there is no turning back. It is only a matter of time before a new reserve currency emerges backed by a commodity. The days of fiat money are numbered.

But, your initial question was what did Hoover do to stimulate the economy before 1932? The answer from the article was raise federal spending by 50% whcih was the highest percent jump in history to that point. I never said he was as big a Keynesian as FDR, only that he was the most interventionist president up to that time.

Glenn Contrarian

Um, Kenn –

Did you check out the link where I showed that there was NOT a 50% rise in federal spending during that period? Looking at the chart, I don’t think it was even a 10% rise in that period.

Do we have more government intervention today than we did 30 years ago – the answer is yes. Thus we have not been an Austrian economic society. Reagan and Milton Friedman were a monetarists – i.e. Keynesian Light. You are confusing Austrians with Supply-siders. They are two different things. Supply-siders generally like the Federal Reserve. We do not because it has been primarily responsible for the maladies you site – destruction of middle class, high costs, redistribution of income. Do some reading on the topic. Murray Rothbard is a good place to start.

Go to Hoover’s Spending) and scroll down to third graph. His administration gradually increased spending from 1929 to 1933. Granted the biggest jump was in last year. Remember, FDR ran on a platform to rein in federal spending and balance the budget. Of course he was referring to Hoover’s budget.

Glenn Contrarian

Grrrr…

I had a detailed reply…and it’s gone. Probably Askimet again.

The gist of the reply was that according to the actual numbers (found on governmentspending.com), the federal spending from 1929 to 1933 rose 25.2 percent, and the per capita spending during that period (in 2005 dollars) rose 28 percent.

In other words, the increase was 25%. NOT 50%-plus, but 25%. I think the Cato Institute should fact-check their work.

As you agreed, the bulk of this came in 1932. Much of this increase came in the 1933 budget submitted by Hoover in 1932, which – even if you count that as a stimulus – the period of time between October 1929 and then was a time without a significant stimulus to the economy. The only truly significant stimulus came after FDR took office (on the day after over 5000 banks failed).

Look, Kenn, it comes down to this. As I showed in comment #44 above, the main causes of the Depression were easy credit and wild unregulated speculation…both of which took place in the Republican back-to-back-to-back administrations of Harding, Coolidge, and Hoover. The economy tanked (5000 bank failures in ONE DAY, mind you), and FDR came in to clean up the mess.

We narrowly missed a redux of the Weimar Republic. FDR saved us from that. He couldn’t bring the economy back in a year or two – nobody this side of Heaven could have done that.

And what happened in the past decade? Easy credit and wild unregulated speculation…during eight years of the Republican Bush 43 administration. And Obama came in to clean up the mess. And as before, this mess takes more than a year to clean up. You can’t expect anyone this side of Heaven to clean up eight years of financial anarchy in only one year…but the Republicans seem to think otherwise.

Now we’re partly to blame – Clinton signed the bill (passed with mostly-Republican veto-proof majorities) that repealed the Glass-Steagal Act. At least he’s man enough to admit that he screwed up – he stated specifically that he shouldn’t have listened to his financial advisors who told him that we shouldn’t regulate derivatives.

But it all boils down to this:

– 12 years of Republican rule resulted in the Depression.
– Twelve more years of Republican rule resulted in the early-90’s recession (with the 82-83 recession and the 87-88 S&L crisis along the way).
– Eight more years of Republican rule resulted in the Great Recession.

And ALL of these were due to lack of proper governmental regulation of the markets. Every. Single. One.

How many times does history have to repeat itself before we get a clue that laissez-faire is simply a way for crooks to run the economy into the ground?

I am not defending Republicans – I believe they are Democrat Lite. Of course, they just caved in on financial reform.

The problem with your analysis is that FDR’s policies did not allow the economy to recover. The depression did not end until about 1944. That was 12 years of his leadership that couldn’t get the job done.

I agree about easy credit and wild speculation. The easy credit we had starting in 2001 (about 1 percent)was a response by Greenspan to stimulate the economy out of recession. It led ultimately to the housing bubble. I believe we agree on that. Bernanke has lowered interest rates even farther (practically zero) to stimulate the economy out of this recession. In your view, does this mean we will have another financial blowout in the near future? And what will Obama’s culpability be since he reappointed Bernanke for a second term as Fed chairman?

John Wilson

I read plenty of Rothbard, and I see what you like about him: he is good at contriving narrowly focused rationalizations of market failures, like Kenn.

But this is the source of the problem with Austrian School, the general theory does not cohere with the rationalizations except in retrospect.

On another (less contentious) subject, I just read that because of the Patriot Act, expatriates such as yourself must maintain a stateside residence in order to maintain an account in an American bank. Does this apply to you, and if so, do you have any advice for this prospective expat?

Glenn,

Officially I’m like Kenn, an expat. And what has been going on is that the lately IRS has been leaning on foreign banks to close the investment accounts of expats to force them to keep their money in American banks. The American government, as you may have heard occasionally, is short of cash.

This is the first stage of restricting the movement of the dollar, and forbidding Americans from transporting money overseas. Theoretically, I’m subject to this crap too. Of course, the catch is that I do not have any money to invest. I owe the bank in Israel, and they will not close my account for that simple reason. The monkeys from the IRS can jump up and down all they want.

Americans who live here, and who are citizens of the State of Israel, have the option of giving up their American citizenship. Whether they do or not depends on what value they put on it.

For myself, being able to say “civitas Americanus est” is not an important consideration for me except for collecting Social Security. It may be cut off for non-citizens, or may be only paid into an American bank. I don’t know. A the moment, I’m not counting on seeing a thin dime, and if I do, I figure that by that time the shekel will be close in value to the dollar. If I get, for argument’s sake $1,100 a month and it is worth NIS 1,700, it’ll be hardly worth it. I’ll still have to work. NIS 1,700 does not get you by for even two weeks.

You, my friend, will not have the option of Philippine citizenship. So, you will be stuck keeping an American address, and keeping an American account. For you, giving up your citizenship will make you a stateless person. That is the last thing you need. Act accordingly.

Glenn Contrarian

Ruvy –

I did not even for a moment consider giving up my American citizenship. I’ve told both my sons – who DO have that option – that they must not give up their citizenship. To coin a phrase, “membership has its privileges”.

I strongly doubt your gloom-and-doom scenario for America’s economic future. I agree that our power in relation to the rest of the world will decline…but a total economic meltdown? Unlikely at best (unless there is an outside cause such as nuclear attack, Yellowstone erupting, and so on).

Glenn Contrarian

Kenn –

Are you for or against laissez-faire economics? I’m asking because in #52 you seemed to agree against it.

And when it comes to FDR and the recovery from the Great Depression, we can split hairs all night. Strictly speaking, the Depression was over with when the GDP equalled or surpassed its level in 1929…and this took place in the late 30’s. The employment problem was taken care of by the build-up in the two or three years before we entered WWII.

But here’s something to think about: where do you get the idea that an economy can bounce back so quickly after an economic meltdown? Germany’s did after the Weimar Republic…but it took the iron hand of Hitler to make that happen. When a country goes through a major economic meltdown, it will NOT recover quickly. It takes YEARS to truly recover…and this means that assigning such blame to FDR is unwarranted. After all, what happened on the DAY before he took office? Over 5000 banks failed…and each of those banks had hundreds, thousands, or tens of thousands of customers, and had taken years, decades, and even generations to build up. Please note that this was only part of the crap sandwich he was handed on that day in March 1933.

Remember – when you tear down something that took so long to build, don’t expect that it’s going to take only a few months to rebuild it.

I was just trying to be helpful, Glenn. As you see, no good deed goes unpunished.

Freedom – real freedom – is the freedom to ignore politics altogether and just go on with your life as you see fit and not suffer any negative effects. That is the freedom American prosperity brought you; that is the freedom you are losing. That is a big part of that decline you so grudgingly admit to.

We’re not that different, you and I, by the way. You had this great epiphany in your life about the evils of American racism. And that epiphany colors your every comment here.

I had this great epiphany in my life about the evil influence of the United States government and the corporations which control it, particularly as it relates to Jews and Israel, and that colors every comment I make here.

John #53 The proof will be in the pudding. Austrians currently believe we are headed for another bigger crash. Thus when they are proven right your view of them about being retrospective will be proven wrong.

I was criticizing easy credit and wild speculation which is not laissez-faire. The Fed which supplied the poison is about as much a laissez-faire institution as the the politburo was in the USSR.

John Wilson

“Austrians currently believe we are headed for another bigger crash.”

So what. I think the same thing and I discarded the Austrians as Hokum. Same for many other people.

Glenn Contrarian

Kenn –

Then I’ll restate – each of the Republican administrations which preceded the Depression, the ’82/’83 recession, the S&L/Thrift crisis, and the Great Recession, were all believers in easy credit and (except for the ’82/’82 recession) largely unregulated speculation.

What we need is a ‘Goldilocks’ government. Not too big, but neither too small. Not fascistically strict, but neither too easy.

Glenn Contrarian

Ruvy –

Freedom – real freedom – is the freedom to ignore politics altogether and just go on with your life as you see fit and not suffer any negative effects. That is the freedom American prosperity brought you; that is the freedom you are losing. That is a big part of that decline you so grudgingly admit to.

My friend, I’m a three-quarters-full-glass-of-water kind of guy. As a whole, America’s never been so free as it has been now. For every freedom that we’ve “lost”, I’ll name two or three significant freedoms that we’ve gained. I may attack the conservatives with verve and conviction…but I’m really one of the happiest campers you’ll ever meet. That doesn’t mean I don’t worry, and that doesn’t mean I don’t get mad or pessimistic at times, but the great majority of the time I really am a happy camper.

On the next post, where you compared our respective epiphanies…you may very well have a point there. Dave will never believe this, but I really do try to keep myself from seeing racism that ain’t there. I do know the danger of allowing one’s convictions to color one’s observations. But the comparison you made intrigues me – I’ve got to think about that one for a while.

Glenn,
“As a whole, America’s never been so free as it has been now. For every freedom that we’ve “lost”, I’ll name two or three significant freedoms that we’ve gained.”

Please prove this – maybe we have a different definition of freedom.

As to your point about Republicans and easy credit, you are absolutely right. Republicans like easy credit because it helps their big bank buddies. But, that is not laissez-faire, but crony capitalism which I loath. Laissez-faire would be a monetary system whereby the market would dictate interest rates and the cost and supply of money. This is what Austrian’s endorse.

Glenn, I think we have more in common than you think. I think we just come at it from different angles. You seem to want the government to spend more on ordinary people. I understand that and actually respect that. At least you are not a wishy washy moderate who doesn’t know what the hell they want. I would like the government to regulate to fight corruption and theft, but most of all to provide us with a sound monetary system so that costs are lowered for all people.

Honestly, I think that is where libertarians and leftists can come together – we need a sound monetary system – no more Fed which exists only for the big banks and a commodity backed currency that the central government can’t inflate ad nauseum to give to the military industrial complex, and other nations (China).

My fantasy is that free marketeers and populists come together and forge a new monetary system and in the meantime continue to support all the social programs. Then over time as that free market, commodity based currency provides us with lower costs and a more productive economy free fron the wild booms and busts that the Fed has given us we can ween the American people off the welfare state.

Glenn Contrarian

Kenn –

Dammit! Stop making sense! It makes liberals like myself look bad to my fellow liberals when I wind up agreeing with you!

I’d really, truly like to see a full audit of the Fed. Instead of being a private institution, it needs to be a fully public institution with its workings transparent to the light of day.

When it comes to freedoms, perhaps we are talking about two different definitions. I’m referring to the wide swath of freedoms gained by people of color, LGBT’s, and non-WASP’s since the early 60’s. I’m also referring to the explosion of worldwide communication and the ease of access to knowledge (particularly of past events which were almost unknown to the general public) with the advent of the internet. Yes, we’ve lost many freedoms – which is why I strongly oppose the Patriot Act, the recent immigration law passed in AZ, and particularly the monstrous anti-abortion law just passed in OK. But all in all, we’re doing much better than in decades past.

But please do me a favor – don’t let my fellow liberals know that we agree on anything. They might take away my flaming liberal card (can’t have card-check without it).

I like that except for one thing: if you ignore politics altogether, you’ll leave it at the hands of the scoundrels.

The point is that when you have a prosperous country, you don’t have to give a damn if scoundrels at the top (or anywhere else) are skimming cream off the cake. There is enough cream and cake for everyone. So, all you need to do is go to the fridge, take out a beer and watch a football game or some cheesecake, or something like that. That is why it is freedom!

Why then are you so contemptuous of the true Left when this is their main message?

You left out the key point of the epiphany “especially with respect to Jews and Israel”. Too many in what passes for “the left” these days might as well put on jackboots and SS uniforms for all the hatred they bear Jews and Israel. They purposely ignore the vicious fascism and repression of Arab societies and excoriate us for what are, by comparison, minor problems. So, pardon me if all I have for the “intelligentsia” of “the left” is contempt.

1) A prosperous country won’t be prosperous for long if the scoundrels have their way. Money gravitates to money and power to power. Constant vigilance is the order of the day.

2) Perhaps they’re misinformed (plus the natural tendency to identify with an underdog). Also, the US-Israeli relations have had a lot to do with that. Since US is justifiably guilty of imperialism, Israel’s image suffers by association.

2) Perhaps they’re misinformed (plus the natural tendency to identify with an underdog). Also, the US-Israeli relations have had a lot to do with that. Since US is justifiably guilty of imperialism, Israel’s image suffers by association.

Roger, they are supposedly intellectuals. They have had at least 40 years to see the truth, instead of delusions. They are not “misinformed”; they have made up their minds and have acted with only the arrogance of a leftist; they pointed their finger of condemnation at the innocent and exonerated the guilty. Not only are they bigots, they are liars and fools.

Contempt is the mildest emotion of dislike I have for these bastards. Bullets in the head are more appropriate. But since the occasion does not arise for that, I settle for mere contempt.